September CA Foreclosure Report

Due to the new CA Law, BS 1137, Notices-of-Default (foreclosure starts) and Notices-of-Trustee Sale  (2nd stage of foreclosure) plunged in Sept.  In a nutshell, this law put a few extra steps on the banks prior to filing a NOD and NTS. Due to this, an in-depth analysis of September’s CA foreclosure activity will not be provided this month.  However, you can take a look at the September charts below and a few of my previous reports (links provided below) and draw your own conclusions.  It is my impression this new law just pushes out the problem a month or two.

As soon as the banks are back in full compliance and pumping out NOD’s and NTS’s once again, which will likely be within a few weeks, I will be able to furnish you with more data.

Notice-of-Default by Month - Note the plunge in Sept due to SB 1137. As you can see before the plunge in Sept, defaults were hanging near their all-time highs despite Subprime defaults being down 25-30% throughout CA.  This is proof-positive that the default crisis has jumped tracks to higher paper grades, which I can see clearly when I break these defaults down on my internal systems.

Monthly Actual Foreclosures/Bank REO - Actual foreclosures are down slightly from the peak but still near all-time highs. Never discount seasonality when reviewing this. Also cancellations are increasing, which have to be added to this figure (shown below).  Remember, 95% of all foreclosures are bought back by the foreclosing entity due to lack of 3rd party interest.

Monthly Foreclosure Cancellations- Note the increase in Cancellations below as Foreclosures above decrease. This means that despite headline foreclosures decreasing, foreclosures in the pipeline have not really moved down as much.

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